But, is it really as bad as it looks, given that the stock price’s upward trend suggests a different story?

Most analysts saw the strong operating performance as positive for the company and focused more on the statements of a higher dividend payout ratio than on the expected troubles the company faced in the wake of the financial turmoil and its exposure to peripheral euro-zone economies. Although operating profit–which Allianz considers its key figure–fell along with net profit, it was better than what the market had forecast.

Italy’s small-size tap of a 10-year inflation-linked bond was well received Thursday, despite it paying a higher yield than at the most recent auction, as it was cushioned by the bond’s pre-auction cheapness relative to its peers and a rally in euro-zone peripheral debt following the European Union summit. European leaders agreed a writedown of Greek debt, increased the firepower of the European Financial Stability Facility by up to fivefold and reached a deal on recapitalizing banks. Initial reactions suggest the deal is a good start but lacks details, with RBC Capital Markets analysts calling it a “deal long on intentions and short on details.” The smooth absorption of the Italian offer was widely anticipated, but the market’s initial positive reaction to the European Union’s deal is well timed ahead of an auction Friday of Italy’s more closely watched nominal bonds, also known as BTPs. Italy will auction up to €7.5 billion of BTPs Friday, even though analysts remain cautious about Italy’s funding costs at auctions ahead later. The Italian Treasury offered €500 million to €750 million of the 2.10% September 2021 BTPei, an inflation-linked paper that investors buy to protect themselves against unexpected rises in prices. The Treasury sold the maximum targeted €750 million at a bid-to-cover ratio of 2.14. The yield came in at 4.61%, compared with 4.07% at its previous sale in July. [Read on over the jump]

The idea to pump up the capital of Europe’s banks, a key element of a “comprehensive” crisis recovery plan, is teetering even before euro-zone leaders can set details at their Oct. 23-24 summit.

European Union bureaucrats and government leaders have been leaning heavily on the idea of banks going to the market to pump up their balance sheets to protect them from shock waves from a Greek debt restructuring.

The European Commission proposes that banks with inadequate capital will need to raise it, from private sources if possible and from governments (taxpayers) as a last resort. Estimates of the additional capital needed range from €100 billion to €200 billion.

But the banks are digging in. They worry about not getting many takers in an unwelcoming market and the price they might have to pay. Some say they can raise the sums through asset sales rather than recapitalizing. Still others, like Germany’s Deutsche Bank, say they don’t need another cent.

It’s also Germany’s largest bank that is now leading the resistance movement. Deutsche Bank CEO and industry icon Josef Ackermann says Thursday that the recapitalization idea doesn’t address the root problem of lacking trust in Europe’s government bond markets.

He also casts doubt on Europe’s governing caste by wondering if they are up to the job…

No one seems to quite understand how the French plan for solving Greece’s debt crisis works.

That’s intentional.

Anyone who’s ever read modern French philosophers, Foucault, Derrida, Lacan, or had to deal with French bureaucracy or watched the corrupt intricacies of French diplomacy will know that complexity designed to befuddle and cow the opposition is not just the means, but the end. Anything objectively simple can be made torturously obscure to keep the unsustainable and unpalatable going indefinitely.

So what’s the French proposal that’s gathering interest from bankers across the euro zone?

It’s designed to operate like the Brady bonds that twenty years ago lifted the burden of debt off Latin America. Except with a twist.

Once again, the ultimate beneficiaries are the banks that lent to these bankrupt states.

As tens of thousands demonstrated in the Greek cacpital Wednesday, Prime Minister George Papandreou is grappling—and failing–to find consensus with the political opposition over the need for a second austerity package. That package is a prerequisite for the country to receive fresh aid and avoid a looming default as early as next month.

In his latest bid for consensus, Mr. Papandreou made a round of calls to opposition leaders earlier in the day, but once again found no support for the package. Sources from his party say he is considering pushing forward alone—without broader support—but is also considering a radical plan to sack his cabinet and force a coalition government.

That looks unlikely to succeed. And if the plan fails, early elections will be called even as the country is trying to convince its European partners that the future of the euro zone depends on Greece receiving more money.

Almost a year after Greece’s socialist government shocked the world by announcing a budget deficit more than twice the size of previous estimates, Europe’s bean counters are still trying to figure out how big a hole there is in the country’s public finances.

According to Greek press reports, Eurostat, the European Union’s statistical agency, is likely to announce this Friday another upward revision to Greece’s 2009 budget deficit. The gap may be as much as 15.5% of gross domestic product, up from a previous revision of 13.6% and a first guesstimate of 12.5% by the government last October.

Those ever-rising estimates underscore the chaos that reigns in Greece’s public accounts—and in its public sector in general.

ATHENS, Sept. 23, 2010 Greek owners of state-licensed trucks demonstrate near the parliament in protest against bill on liberalization of the sector, which was passed on Sept. 22.

Greece has finally adopted a law to liberalize the local haulage sector but there is a long road ahead to free up many other service sector professions. That path will be strewn by vociferous and disruptive protests that will have to be dealt with so that the economy is put on the path to growth.

On Wednesday Greece’s socialist government rammed through a law to liberalize the domestic trucking sector ignoring the political costs and protests from vested interests. Read my story here.

The new law will slash, over a period of three years, the price of a trucking license to EUR1,500 from the current prices of between €70,000 to €150,000. And it finally lifts the 40-year cap on the number of licenses issued, as well as encouraging the establishment of haulage companies.

There was rare bipartisanship in parliament over the law because the main conservative party and several independents also voted for the reform, in principle, even if they could not agree with some of the proposals. This also reflects the will of Greek voters and consumers, who are sick of being victimized by oligopolies and Soviet-style sector restrictions

The protesting drivers are now slowly on their way home and back to work, but further protests cannot be ruled out because they are seeking preferential tax treatment and improved pension entitlements.

Accorded to respected local think tank IOBE, trucking deregulation could benefit the recession-hit economy to the tune of about €1 billion and is set to reduce freight rates by 2.5% a year, as well as increase sector employment.

However, this is just the beginning of the Greek government’s actions to tear down barriers to entry and free up cosseted, or so called “closed” professions–which the debt laden Mediterranean country has promised the International Monetary Fund and the European Union it will do in exchange for the €110 billion bailout it received to stave off bankruptcy.

The real decision made by euro-zone authorities last Sunday was not to save Greece, but to escort it to a safe house where the country’s massive debt can be cut down to size through a painful restructuring.

AFP/Getty Images

Willem Buiter, right, talking to George Soros in February 2009.

That’s the view of Willem Buiter, a former member of the Bank of England’s Monetary Policy Committee and frequent consultant to the European Central Bank, who recently joined Citigroup as its chief economist.

He’s not making a prediction. He’s saying the decision has already been made.

In a note distributed Wednesday he said:

“A Greek sovereign restructuring with a net present discounted value haircut became unavoidable when the euro area decided not to lend to Greece at something close to the risk-free rate, but at 300 or 400 basis points over the swap rate.”

The final €110 billion rescue package is full of feints. One is that the tough conditionality clauses require Greece to make swingeing fiscal cuts, so that it is running a primary budget surplus in 2013, by which time its gross sovereign debt will have risen to around 150% of GDP.

The hopeful rhetoric is that Greece might be able to tap markets at a 5% yield, roughly the marginal term of the rescue package.

But even if Greece could issue bonds at 5% in 2013, it would still have to pay 7% of GDP just to pay interest on its debt, a level that spells perpetual stagnation or would require a massive boom in global demand for ouzo and feta cheese.